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Most Low-Wage Workers Are Cheated of Pay, Report Finds
New York Times
Patrick McGeehan

January 28, 2010
View the Original Article

More than half of the low-wage workers in New York City are routinely being cheated of some of the meager pay that is due them, according to a report to be released on Thursday by the National Employment Law Project.

The average worker in a low-wage job in the city lost out on $58 a week, more than $3,000 a year, because he or she was not paid minimum wage or overtime, or because of some other violation of labor laws, according to the report [pdf]. These workers, including laundry employees, home health care aides, deliverymen and grocery baggers, would still earn less than $400 a week, on average, if they were being paid fairly, according to the report.

In all, the report estimated, more than 315,000 workers were denied some of their deserved pay, amounting to a loss of more than $18.4 million a week — nearly a billion dollars a year — to the workers, and therefore to the neighborhoods where they spend their paychecks or to the families to whom they send money.

“This is such a warning bell that this is becoming an accepted business strategy in low-wage industries,” said Annette Bernhardt, an author of the study and policy co-director of the law project, an advocacy group for low-wage workers and the unemployed. “We’re talking about something that is more systematic than a few random employers violating the law.”

Ms. Bernhardt credited the New York State Department of Labor with having taken a more aggressive approach toward punishing employers for these violations in the last few years. As if on cue, state labor officials announced on Wednesday that they had penalized a C-Town supermarket in Elmhurst, Queens, $331,000 for failing to pay its baggers properly.

One of them, Guadalupe Medina de Morales, a 66-year-old immigrant from the Dominican Republic who worked at the store until 2005, said her only pay in eight years of bagging and delivering groceries full-time for C-Town had been tips from the customers, which amounted to about $125 a week.

“Nunca, nunca,” Ms. Medina de Morales said — “never” in Spanish — to describe how she was paid by the store’s managers, who still had her fill out W-2 tax forms like any other employee.

Even though the store paid her no hourly or weekly wage, it dared to extract about $17 a week from her tips to cover its withholding and unemployment insurance taxes, according to state officials.

“The overall practice of paying tipped employees no wages at all, we’ve seen that in a number of cases,” said Terri Gerstein, a deputy commissioner of the Labor Department. “The twist of subtracting from their tips was a little bit unique.”

Ms. Gerstein said the department had investigated a number of other small supermarkets whose baggers received only tips. “There are whole industries where the business model is based on violative practices,” she said.

The National Employment Law Project’s report, based on a survey of 1,432 workers in low-wage industries in the city, including undocumented immigrants, found evidence of such patterns.

The project found that more than one-fifth of all low-wage workers in the city were paid less than the minimum wage, which was $7.15 an hour when the survey was conducted in 2008. But the incidence of that underpayment varied widely by industry, ranging from almost 53 percent of all workers in laundries and dry cleaners to 2 percent of residential construction workers, the report showed.

Failure to pay overtime to employees who worked more than 40 hours a week was even more common. More than three-fourths of the workers surveyed had not been paid 1.5 times their regular wages for overtime hours, as the law requires, according to the report. About one-fourth of them were paid less than their regular hourly rate or not at all for those extra hours, the report said.

The authors estimated that there were more than 585,000 nonmanagerial workers in the city’s low-wage industries, which were defined as those whose median wage was less than $13.07 an hour — 85 percent of the city’s median wage.

The report also concluded that the state’s workers’ compensation system was “not functioning as intended.” Of the workers surveyed who had been seriously injured in the past three years, only about one-tenth of them had filed claims for workers’ compensation. Nearly half of them said they had been required to keep working despite their injuries, the report said.